Australia's FFC to clamp down on US studios taking tax rebate

US studios and other international players who plan to take films they have developed to Australia to shoot, then claim the new 40% producers rebate for Australian films rather than the 15% location offset designed for foreign films, are very unlikely to be successful under yet-to-be-released new guidelines.

The Film Finance Corporation Australia (FFC) board yesterday signed off on 1,500 words clarifying what constitutes an Australian film and they will be released shortly. The section most relevant to those circling this new pot of soft money from abroad, is three-quarters of the way in under 'other matters', and it relates to the origination of projects.

'Where the underlying rights have been created by a non-Australian and the subject matter is not Australian the FFC would expect all development of the project to be originated and owned by Australians,' it reads. 'Where the subject matter is not Australian or about Australians, the FFC would expect the project's development to be originated, created and owned by Australians.'

FFC chief executive Brian Rosen refused to comment on Justice League Mortal (formerly Justice League of America), to be directed by George Miller for Warner Bros, but this is the film that has stirred up this issue and prompted a large proportion of producers to worry about the precedent it would set if it passed the Australianness test. Its characters are superheroes such as Batman and Wonder Woman.

Rosen said the clarification does not necessarily exclude a project originated by a US studio from being Australian. Crocodile Dundee, for example, could qualify: 'If a story originates in the US, is 100% set in Australia and portrays Australia, what would stop it qualifying is that every other aspect of it is not Australian.'

Moulin Rouge, Babe and Happy Feet would get the 40% offset under the new system, he said. They do not have Australian subject matter and were made under the studio system, but Australians unquestionably drove their origination, development and production. Judging by the fuss he has made in the media in the last few weeks, Miller has not convinced the FFC of this in the case of JLM.

The FFC attempted to create a point system to determine what constitutes significant Australian content in June last year, soon after the producer offset was announced, but the industry could not agree on this approach and the now ousted Liberal Government wanted the FFC (and Screen Australia once it replaces the FFC from July 1) to have discretion. A point system is used for official international co-productions, which automatically qualify for the offset. The offset is only payable on expenditure in Australia, however.

'The previous Government was more open about what should qualify,' said Rosen, who continually refers to the need for a holistic approach that considers all factors.

Up until now, the FFC guidelines merely said that significant Australian content takes in five factors: subject matter, the place where the film was made, the nationalities and places of residence of the key creators, production expenditure and other relevant matters. There was little detail.

The major difference between the new eligibility test and the one that has been used for the last few decades is that it no longer matters where the finance comes from or who holds the copyright.

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